Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 12 - Pure Monopoly - Discussion Questions: 4


The answer is below.

Work Step by Step

Monopolies will charge higher prices even if it costs them the same amount to make the product, for monopolies do not have to worry about competitors that will undercut them. The one exception is the government granted monopoly. Generally, the government will only grant a monopoly if the company agrees to set prices at fair amounts. For this reason, many utilities remain at reasonable prices, even though the company has a monopoly.
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